Gurgaon

With the implementation of the new real estate regulatory bill, realty sales are expected to rise by 10% and the new home launches are expected to decrease by 20%. Foreign direct investment into the real estate sector is also expected to increase by 20%. The bill is likely to boost realty sales and safeguard the interest of the buyers.

The Real Estate (Regulation and Development) Act 2016 passed on 25th March 2016 has brought in cheer for the real estate sector. Dhoot Group, a prominent name in the realty sector highlights that it has brought the much-needed transparency and accountability in the real estate industry.

The act has safeguarded the interest of the buyers as it restricts the developers to sell their homes before getting all the project approvals. It increases the cost of capital for the developers as they will have to look for equity rather than structured debt to finance the land.

Dhoot Group developers further stated that such an act was much needed in a sector known for deceitful and fraudulent dealings. However, the prices of houses will not fluctuate as the rise in cost of capital will not be passed on to the buyers by the developers in the present scenario of unfavorable market conditions. It is expected that the banks will start funding for land purchases as well. The individual or group investors, who usually invest in residential properties with an intention to withdraw even before the project is completed, can now participate as lenders and not as investors.

The real estate sector of India, especially residential sector, which has been stagnant since last couple of years, is likely to rebound in the coming months. The steps taken by the government to bring transparency in the real estate sector will boost the sector in long run.

The stagnancy in the realty sector resulted in high inventory levels, diminished demand and limited liquidity saw sales and prices plummet, impacting new launches in the past few years. Dhoot Group, a prominent name in the real estate sector highlights that the introduction of much needed changes in the economy and various initiatives announced by the government will bring in cheer for the realty sector.

According to a JLL report, as per statistics, new residential project launches reduced by 6 per cent in Jan-March 2016 period over Oct-Dec 2015. For FY 2015-16, the number of new launches stood at 1,81,294 units compared to 2,16,082 units in FY 2014-15, equaling a drop of 16 per cent.

Overall residential sales were down in the FY 2015-16 compared to FY 2014-15. As per recent data, 1, 58,211 units were sold in FY 2015-16 vs. 1, 61,875 units sold in FY 2014-15, which is a drop of 2.2 per cent. However, a positive twist to this otherwise grim situation is the rise in sales in Q1CY2016. This quarter saw a sale of 42,521 units compared to 39,001 units sold in Q4CY2015 – an increase of 9 per cent.

Talking about the Real Estate Regulation and Development Act 2016, Pawan Kumar Dhoot asserted that it will bring in the much needed transparency in the realty sector and safeguard the interest of home buyers. He further added that the act will encourage investments from foreign and domestic financial institutions as well as increase the credibility of developers.

The Real Estate Sector has not been performing adequately from a long time and the proposal of RBI Governor Raghuram Rajan is not favored by the Realtors in context of lowering property prices to encourage more people to buy.

It is due to increasing unsold stocks and delays in project completions the industry is facing slowdown and reducing more prices would surge chaos as according to Confederation of Real Estate Developers’ Associations of India (CREDAI) president, Getamber Anand price of 90 per cent of the residential supply in the country has already corrected. “If prices fall further, it will lead to non-performing assets (NPAs) and non-delivery of projects,” says Anand.

Pawan Kumar Dhoot, Managing Director, Dhoot Group also holds the same sentiment as according to him it is not a viable option to uplift the prevalent slump in the sector. He explains RBI has already offered deduction by 1.5 per cent cumulatively since January last year and earlier this month the policy rate was cut by 0.25 per cent to 6.5 per cent which is lowest level in more than five years.

Getamber Anand also clarifies the RBI statement by saying “His (RBI Governor) statement should not be taken out of context as he has recommended an adjustment and not necessarily a price cut. The adjustment could be through other ways like easy payment scheme to attract home buyers.”

Amongst all the dialect, the main aim of RBI Governor is to encourage investment in the real estate industry which according to him can be achieved if convenience is on investor’s side for which he adds, “There is an issue of certainly how they see the housing market and how they see prices. There has to be an adjustment so that more people want to go and buy.”

Following continuous ruin in industry, financial specialists may get paid for their determination and detachment soon. As indicated by Pawan Kumar Dhoot, Managing Director, Dhoot Group, year 2016 may get cheer land part, with venture of proximate 1 trillion USD; a surge in property procurement is examined. According to CBRE’s Global Investor Survey directed amongst January and early February larger part of purchasers i.e. 82% opined to either stay same as in earlier year or expansion obtaining exercises this year.

Pawan Kumar Dhoot likewise presented the perspectives of the Chairman and Managing Director of CBRE South Asia, who said, “Real Estate remains a critical resource class for residential and abroad financial specialists. The year 2016 guarantees to be a decent one for the business and it is normal that India’s land area will get some advantage, though a little share, of the worldwide land venture stores,”.

Since the real estate industry has various governments’ contribution lined up in name of Real Estate Regulation Bill or Housing for all scheme at affordable prices, it is less likely that people would not find interest in this sector and it is time for developers to gear up and put in their all efforts to meet the accruing demand.

The recently passed Real Estate (Regulation & Development) Bill, 2016, in the Rajya Sabha and the Lok Sabha, is set to ease the home-buying process. The bill has undergone several amendments and will be effective in bringing transparency and accountability in the real estate sector, thus increasing consumer confidence and benefiting the sector as a whole.

The bill aims to make the sector transparent, give home buyers the advantage and, in turn, lift the market.

The bill sets a firm foothold in the real estate sector and would be a foundation for this sector for many years to come. With the changing skylines in many cities, it takes within its ambit many factors, including development and redevelopment, thus paving the way for a smooth road ahead. It will impact the sector, positively at two levels—first at the micro level of homebuyers, and second at a macro level of the entire real estate sector.

Timely completion and delivery:

Project delays are one of the major issues currently plaguing the real estate sector. In the residential property sector, a delay of three to four years is the accepted norm; in certain cases, it is more than seven to eight years. Over-leveraging by developers is the primary reason for such delays.

Developers will now have to deposit 70% of the collections from home buyers in a dedicated account to be used only for that particular project. It has been clarified that if the land cost has already been incurred by the promoter, he can withdraw the amount to that extent.

Level playing field:

At present, rights of both the developer and the home buyer emanate from the agreement for sale. But these agreements are heavily loaded in favour of the developer. For example, interest on late payments for consumers is as high as 18%, but the compensation to them by developers in case of a project delay, is abysmally low and varies across contracts. Henceforth, both developers and consumers will have to pay the same rate of interest for delays on their respective parts.

Developers will now have to deliver on time, adhering to the level of quality stated in the information provided to the regulatory authority during registration.

Better quality buildings:

To counter issues related to building defects and promote good practices in the sector, some developers provide a warranty for structural damages for 1-3 years. Extending this period, the bill states that the liability of the developers for structural defects will now be five years from the date of handing over possession.

Majority to hold sway:

Developers cannot make alterations or additions in the sanctioned plans and specifications of the building or the common areas without the consent of at least two-thirds of buyers. Such provisions in the bill will ensure that home buyers are getting the exact apartment for which they have paid and have a say in layout revision. However, this provision of obtaining consent of two-thirds of buyers may cause delay. Buyers may raise unnecessary objections and it may result in legal proceedings.

This may be a problem in cases where it is not affecting the premises or flats already sold and the open or common areas, as also in cases where the total layout allows construction of more buildings in compliance of the building rules or building bye-laws or Development Control Regulations.

Macro-level impact:

Provisions in the bill will without doubt make the process of home-buying much easier, but on a larger scale, they will also have repercussions on the entire real estate sector.

The real estate market is largely non-transparent. Most stakeholders operate in their own silos. This is true especially among developers. The absence of a regulator is to a great extent responsible for this plight. With a regulator in place, the sector will be more efficient, prices will be more rationalised and most importantly, the regulator will ensure that malpractices are weeded out well in time.

Time Centre an office-cum-shopping-complex is designed keeping in mind the pace of time. Time Centre Project promoted by Sh. Pawan Kumar Dhoot and Ninex Group. Project Located at Golf Course road, Time Centre will provide ultra-modern infrastructure and facilities which will make it a right destination for the retailers, corporate world and shoppers